SBI Q2 FY27 results: Profit up 14%, but what do the numbers tell us?

State Bank of India (SBI) on Monday posted a 14.28% rise in standalone net profit to ₹23,038 crore for the quarter ended September 30, 2026, compared with ₹20,160 crore in the year-ago period. Net interest income was ₹49,143 crore, up 14.69%, and operating profit was ₹34,226 crore, up 7.28%. Gross advances increased by 17.84% to Rs 52.08 lakh crore, indicating a robust loan growth. The bank also reported improved asset quality and better margins.

Profit Growth: How Much Came from Core Banking?

SBI’s standalone net profit rose 9.07% quarter-on-quarter to ₹23,038 crore in Q2 FY27. Profit rose by 12.31% to ₹44,159 crore in the first half of FY27. But the operating profit growth was lower at 7.28% as operating expenses grew faster than income. This pushed the cost-to-income ratio to 49.82% from 49.28% a year ago, reflecting higher operating costs.

Non-interest income declined 4.94% to ₹19,066 crore that had included a one-time gain of ₹7,288 crore from the sale of stake in SBI Funds Management. Non-interest income excluding one-time gains was down about 23.8% in both years. However, fee income rose 9.63% to ₹9,549 crore, with regular fee income showing growth despite weakness in other income sources.

Net Interest Income and Margins: Is the Recovery Sustainable?

SBI’s net interest income rose 14.69% to ₹49,143 crore in Q2 FY27, aided by higher interest income and slower growth in interest expenses. Domestic net interest margin (NIM) was 3.11% in the quarter, up from 3.00% in the prior quarter and 3.08% a year ago. The bank managed to maintain stable margins even as lending yields fell thanks to cheaper deposit costs. But the sustainability of the improvement will depend on the cost of deposits and competitive pricing of loans in the next quarters.

Driving Growth: Retail, SME and Agriculture Lead the Way

Gross advances of SBI grew 17.84 per cent year-on-year to Rs 52.08 lakh crore backed by growth in key lending segments. Personal loans for retail grew by 14.54%, loans for agriculture rose by 22.64%, advances to SMEs went up by 21.97% and loans to corporates grew by 16.12%. In retail lending, gold loans grew by 89.31 per cent and home loans by 11.94 per cent. Loan growth was strong across segments but keeping asset quality high will be important, particularly in agriculture, SME and gold-backed lending.

Deposits and Funding

SBI's total deposits grew 12.27% to ₹62.78 lakh crore, slower than the 17.84% growth in advances. Domestic CASA deposits increased 8.13%, while term deposits grew 14.26%. However, the CASA ratio declined to 38.32% from 39.63% a year earlier, indicating a lower share of low-cost deposits. The domestic credit-to-deposit ratio increased to 73.02%, while the liquidity coverage ratio improved to 140.47%. Going forward, attracting deposits at competitive costs will be important for supporting loan growth and protecting margins.

Asset Quality and Capital

State Bank of India’s asset quality improved in Q2 FY27 with gross NPA ratio falling to 1.39% from 1.73% a year ago. The net NPA ratio improved to 0.36 percent from 0.42 percent. Fresh slippages declined to ₹5,227 crore and loan-loss provisions fell 33.23% to ₹2,759 crore. But, the gross NPA ratio for agriculture loans was higher at 6.56%. The capital adequacy ratio, meanwhile, rose to 16.09% from 14.62%, better enabling the bank to support future lending and absorb potential credit losses.

Conclusion

SBI delivered robust Q2 FY27 results driven by strong loan growth, improvement in margins and lower provisions. The bank registered a return on assets of 1.14% and return on equity of 18.68% in H1 FY27. Its subsidiaries such as SBI Life, SBI Card and SBI Funds Management also helped to boost the overall profitability.

But a one-time profit on the sale of a stake helped the bottom line, while operating costs were up and non-interest income was weak. Deposit growth was also behind loan growth, pressuring funding costs. Going forward, for sustainable earnings growth for SBI, it will be important to attract deposits, maintain margins and control bad loans.